China's Investment Rate: Characteristics and Implications
30 Pages Posted: 30 Nov 2015 Last revised: 16 May 2018
Date Written: May 13, 2018
China’s rapid economic growth over the past forty years was in good part driven by capital accumulation, with, in recent years, investment taking up almost half of output. This paper documents the role of investment in driving economic growth in China, questions how much longer China can sustain high investment rates, and critically examines arguments suggesting an end to the investment boom. The size of the Chinese economy allows investment to remain broad-based across all economic sectors, with little specialization. The foreign share of investment in China has become negligible, and the China growth story thus has become a domestic one.
Keywords: investment rate, capital-output ratio, ICOR, national investment strategy, economic growth
JEL Classification: E01, E22, E6, O11, O53
Suggested Citation: Suggested Citation